Are you going to take a vacation this year? My guess is that your answer is YES. You have probably already decided when and where you want to go and have started dreaming about it. Now, how are you going to fund this vacation you’ve dreamed up? If you start planning now, you could fund it with cash!
By planning ahead of time, you can more accurately see just how much each aspect of your vacation will cost. You can anticipate travel, gas, lodging, food, entertainment and other expenses. Once you know how much your vacation is expected to cost, you can save money ahead of time!
We recommend using our Mini-Budget Tool to plan your vacation spending. You can really plan your vacation three different ways to see different scenarios and how they affect your bottom line. If you spend your money on paper, you can stay within budget during the trip.
Setting a budget and planning ahead of time is key to having a debt-free vacation. And I guarantee you, a debt-free vacation is a million times better than the alternative. You can have all the fun with your family without the stress of the incoming credit card bill.
Want more tips like this one? Subscribe to the Monday Money Tip Podcast HERE.
Merry Christmas Eve! Today on the Monday Money Tip Podcast, I’m sharing how you can balance striving for future goals while still being content with what you currently have. We’ll talk about our R&R at the end of the year and goals you should consider for next year. We will also share a very special success story and a big announcement about the future of the Monday Money Tip Podcast!
It’s our goal at the end of each episode that you gain hope and encouragement in your financial journey, you’re equipped to take a next step, and that you’ve had FUN with us!
Find the Monday Money Tip Podcast HERE. Please let us know what you think by leaving us a rating!
Email email@example.com to ask questions or share success stories.
About the Episode:
- Joe shares each of the categories in which you should set goals for 2019.
- Hear a very special success story that relates directly to the Monday Money Tip Podcast.
- Learn how to balance striving for future goals and being happy with what you currently have.
Quote of the Day: “But godliness with contentment is great gain. For we brought nothing into the world, and we can take nothing out of it. But if we have food and clothing, we will be content with that. Those who want to get rich fall into temptation and a trap and into many foolish and harmful desires that plunge people into ruin and destruction. For the love of money is a root of all kinds of evil. Some people, eager for money, have wandered from the faith and pierced themselves with many griefs.” – 1 Timothy 6:6-10
Do you know how much money you will need per year in retirement? Do you know how that number will be affected by inflation? I would encourage you to check out our Retirement Nest-Egg Calculator Tool. While it may trigger a shock to your system when you see the numbers, it can help you get into gear to retire well.
This calculator is incredibly easy to use and only needs two pieces of information from you! All you need to do is enter the amount of money you would like annually in retirement and how many years until you expect to retire. After that, the calculator will compute the amount of money that you need to have saved and how different annual rates of return will change that number.
Below you can see a calculation that I ran for an “annual amount I want” of $75,000 if I hypothetically retire in 20 years:
- The calculator assumes that you will never touch the principal.
- The calculator assumes that you will give your nest-egg a “cost-of-living-raise” of 4% each year.
- This calculator adjusts the “annual amount your want” for an average annual inflation of 4%.
So, at 4% annual inflation, I will need $164,334 per year in 20 years to have the same purchasing power that $75,000 has today.
The bottom six rows tell you what you need to have in your nest-egg at different rates of annual growth. At 8% annual return, I would need $4,108,356 when I retire. That number drops significantly if I expect growth of 12% and I would only need $2,054,178 when I retire.
These numbers may seem astronomical and you might feel like you will never build a nest-egg of that size. But remember, the power of compound interest can work in your favor! By starting early and investing consistently, you can watch your nest-egg grow to numbers you may have only dreamed of.
Want more tips like this one? Subscribe to the Monday Money Tip Podcast HERE.
Whenever you obtain extra money, it is an opportunity to take your finances to another level. Instead of racing out to spend it frivolously, I encourage you to consider how you can put that money to use in a way that propels your financial situation forward.
- Pay off a debt When you pay off a debt, it will instantly increase your monthly cash flow. This is something we call “monthly margin” around here at I Was Broke. Now I’m Not. Plus, what other financial decision is more rewarding than making a debt leave your life?
- Buy yourself out of a membership/subscription Things like cell phone contracts, gym memberships, satellite tv subscriptions, etc. Many people keep an unwanted subscription around simply because they don’t have the money to buy out the few months ‘cancellation fee’ required to cease service. This allows you to gain monthly margin and makes an annoying expense begin to fade in your rear view mirror!
- Build savings Increasing your financial reserves/cushion/margin – something we call “reserves margin” around here at I Was Broke. Now I’m Not. – is never a poor decision! This positions you to accommodate unexpected financial challenges or pursue an opportunity.
- Invest for retirement $1,000 extra today will be worth $3,300 in 10 years, $10,893 in 20 years, $35,950 in 30 years and $118,648 in 40 years. Get #FiredUp!
- Invest for college $100/month will be worth $8,167 in 5 years, $23,004 in 10 years, and $75,786 in 18 years. Excellent decision!
- Obtain more education/certifications Knowledge is power and can equal a substantial increase in your income and your value to the business you conduct.
- Purchase a(nother) home Real estate is one of the time-tested ways for people to build wealth. Plus it can produce additional income using a service like VRBO, Homeaway, or AirbNb
- Become a private investor There are lots of ways to become a private investor. You could start a small business. Maybe acquiring a minority stake in a larger existing business is more your style. Angel investing has been very popular over the past decade. Hard money lending is another way to put your extra money to work. Perhaps being a silent partner in a franchise could be more suitable for you.
- Vacation A great leader once shared this formula with me: Change of pace + Change of place = Change of perspective | I’ve found it to be true. There is something about “getting away from it all” that helps you achieve clarity on your next steps.
- Give it away There’s something powerful about giving money away. One friend told me that he “gives because it keeps him from becoming greedy.” When I give money away, it makes me want to make better money decisions so I can give even more. It connects to the “perspective” part of the equation I shared in #9.
No matter what decision you make, choose to put the extra money to work for you. Your future self is depending on you!
We all know that it is a good idea to prioritize our savings accounts. Yet, more than 7 out of 10 Americans live paycheck-to-paycheck (in this article, it was almost 8 out of 10!) and would experience major financial complications from one missed paycheck.
I used to live this way. In addition to the expected financial challenges, my poor money management skills carried stress into every facet of my life. If I had known all of the non-financial benefits of prioritizing the establishment of financial margin, I’m convinced I would have avoided a lot of unnecessary stress. Perhaps by sharing these benefits in this series of posts, I can help give someone the final nudge needed to begin to prioritize saving money.
Benefit #3 MARGIN = SPEED
Have you ever had to park a car in a garage that had a narrow entrance? An garage entrance so tight that you feared that you would knock both mirrors off of the car each time you tried to park in it? As a result, you approached the entrance very slowly and cautiously.
If you had to park in a garage with a double door entrance, you could screech in at 30 mph and still safely make it into the entrance.
This is exactly the case with financial margin! Without financial margin, a person is forced to proceed with great caution for fear of making a major financial error. One misstep and there will be financial damage! With a lot of savings, you are able to move more freely and with greater speed. This is a wonderful benefit!
Have you ever noticed that people with money tend to get the better financial deals? They are the ones who purchase a house, business, land, and investment at a major discount. Why? Because they had money ready to do the deal! They had margin!
Back when I was broke without financial margin, I attempted to purchase a business. Think about that statement for a minute. I tried to purchase a business without any money. Do you think I was successful? Absolutely not! They looked at me incredulously and laughed me out of the building. I resolved to get better instead of bitter.
“I resolved to get better instead of bitter.” – Joseph Sangl
Flash forward to six years later. I had indeed gotten better by prioritizing financial margin, and I found a farm for sale at a steep discount (it was in the middle of the Great Recession). Because of margin, I was able to close on the deal in 11 days from the date I first walked on the land.
Speed. Enabled by financial margin.
It’s a wonderful benefit.
Ready to take your finances to the next level? Get your copy of I Was Broke. Now I’m Not. and get started on your path to a fully funded life!